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2018 (2) TMI 1292 - HC - Income TaxReopening of assessment - notice issued beyond the period of four years - change of opinion - advances receipt by assessee being undisclosed - independent application of mind by assessee - Held that:- The reasons recorded show that the Assessing Officer had received information from the Investigating Wing in connection with advances of ₹ 10.25 Crores [rounded off] received by the assessee from M/s. East West Finvest India Limited during the FY 2009-10 which is relevant to AY 2010-11. M/s. East West Finvest India Limited works as an entry operator and earns bogus funds to provide advances to various persons. Out of the loan of ₹ 10.25 Crores received by the assessee from M/s. East West Finvest India Limited, repayment of ₹ 1.45 Crores was made. Interest of ₹ 3.89 lakhs was also paid. AO further noted that as per information, M/s. East West Finvest India Limited was a paper concern and the advances/loans received by the assessee from such concern were bogus loans and the entire transactions were bogus and sham transactions. That, on the basis of such materials on record that he formed a belief that the assessee had not made true and full disclosures and the income chargeable to tax as therefore escaped assessment. The reasons thus recorded do not proceed only on the information supplied by the Investigating Wing. The Assessing Officer having applied his mind and processed such information, formed his belief that the income chargeable to tax has escaped assessment. Neither the application of mind, nor the formation of belief that income chargeable to tax has escaped assessment on the basis of information available at the disposal of Assessing Officer, have to be expressed in any rigid format in the reasons recorded. Hence, as these two essential requirements can be gathered from the reasons recored, the notice for reopening cannot fail on such basis The opinion would be formed on the basis of disclosures. When disclosures are found to be prima facie untrue, the opinion formed earlier would not prevent Assessing Officer from examining the issue. In the present case, as noted, Assessing Officer received additional information after the original assessment was over, on the basis of which he formed a belief that the entire transaction was a sham transaction. What is required is the reason to believe that income chargeable to tax as escaped assessment. Sufficiency of the materials in the hand of the Assessing Officer which enabled him to form such a belief would not be examined - Decided against assessee.
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